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They’ve drawn far less attention in the U.S. media than the wave of anti-U.S. protests throughout the Islamic world responding to the infamous online anti-Muslim movie trailer. But the anti-Japanese protests in China might have more enduring significance. These are the largest in the postwar (post-1945) period, involving hundreds of thousands, causing Japanese owned factories and retail shops to shut their doors and even consider closing down permanently. Even Chinese-owned Japanese restaurants are posting Chinese flags and patriotic messages on their doors, hoping to avoid attack.

At the height of the violence,” reports the Los Angeles Times, “dozens of Japanese businesses were attacked, including a Panasonic plant in Qingdao, a Toyota dealership and 7-Eleven shops. Hundreds of Japanese model cars were overturned or burned.” Reuters reports that 41% of Japanese firms feel affected by the protests and are considering altering their plans for investment in China. As of last week Japanese automakers had lost $ 250 million in output due to the protests; Nissan, Toyota and Honda have suspended some operations.

There is a looming general crisis in the economic and political relationship between the world’s second and third largest economies. These have been one another’s top trading partners for some years now. Their total annual two-way trade is around $ 345 billon. Theirs is arguably the most important bilateral trade relationship in the world, after the Sino-U.S. relationship. But plans for a gala event to commemorate the fortieth anniversary of the re-establishment of diplomatic relations between Japan and China have been postponed. This is all pretty serious.

What occasions the nationwide protests and unprecedented bilateral tensions? Five small uninhabited islands and three rocky outcroppings northeast of Taiwan and southwest of the Ryukyu island chain, which both China and Japan claim as theirs. The Chinese call them the Diaoyu Islands, the Japanese the Senkaku Islands. Some westerners have dubbed them the Pinnacle Islands. Strategically located in the South China Sea, surrounded by rich fisheries, they are thought to hold huge natural gas and oil reserves. The U.S. Energy Information Administration estimates the seabed around them may hold as much as 100 billion barrels of oil. Sovereignty over them affects control over 21,000 square nautical miles.

The Chinese Foreign Ministry has indicated that it does not want the territorial issue to become a “disturbing factor” in the mutually lucrative bilateral relationship with Japan. But the Japanese government has made it such. By moving to purchase three of the islands from their current private Japanese owner, following a campaign by Tokyo’s right-wing governor Ishihara Shintaro, the Japanese government has inflamed the situation.

The Japanese government insists that “there is no dispute” about sovereignty over the islands. By this it means that Japan has a clear-cut claim based on international law, specifically the Shimonoseki Treaty signed in 1895 after Japan had defeated China in the Sino-Japanese War. (That is, it was legitimate war spoils, rather like, say, Guam which was won by the U.S. during the Spanish-American War of 1898.) This legalistic argument not only assumes the respectability of imperialism but ignores important details of postwar legal history.

Some relevant historical facts about the issue:

1. Chinese records dated 1403 and 1534 mention the islets, referring to the largest one as Diaoyu and naming two others. The latter text, A Record of the Imperial Envoy’s Visit to Ryukyu, documents the visit of a Chinese diplomatic mission to the Ryukyu Island kingdom (centered on Okinawa), which was then not a part of Japan and never had been. Ming-era officials, en route to the investiture ceremony of the Ryukyuan king, regarded the isles as the border between the province of Taiwan and the Ryukyus, which had a tributary relationship with the Ming court. Neither the Ryukyuans nor the Chinese regarded the Daioyu cluster as part of the Ryukyus. They were obviously part of China.

The Record describes the islands as the “border that separates Chinese and foreign lands.” Contemporary Taiwan gazetteers state “Diaoyu Island accommodates ten or more large ships,” indicating that it was visited by Chinese junks. Another record of an embassy in 1561 mentions the islands as landmarks passed on the final stage of the voyage from Fuzhou to Okinawa. There is no record of Japanese visits to the Diaoyu islands or even Japanese knowledge of them as of the sixteenth century.

2. In the 1590s, Toyotomi Hideyoshi, the warlord who had re-united Japan after centuries of division, sought to make the Ryukuan kingdom a vassal-state and cooperate in an invasion of Korea. The Ryukyuan king refused. But in 1609, forces from Satsuma, one of the many Japanese baronies of the time, invaded the Ryukyu kingdom and kidnapped the king, Sho Nei. They brought him to Japan and forced him to acknowledge both the daimyo of Satsuma and the Japanese shogun as his overlords. From that point the Ryukyus paid tribute to both China and Japan. Japanese officials saw the Ryukyus as a vassal-state—foreign, not part of Japan proper, but obliged to provide such goods as sugar-cane, tobacco, and products from China and Southeast Asia to Japan.

But the Japanese did not view the Diaoyu islands as part of this Ryukyuan vassal-state. Eighteenth century maps produced in both China and Japan plainly show the Diaoyu isles as Chinese territory. A map drawn up in 1785 by Hayashi Shihei, a military scholar in the castle-town of Sendai, in his Illustrated Survey of the Three Countries rendered the islands in the same color as that used for China rather than that used for the Ryukyu kingdom. Japan did not claim sovereignty over the Diaoyu islands during the Edo period (1603-1868).

3. Japan did not assert or obtain internationally recognized sovereignty over the Ryukyus until 1872, when it pronounced the former kingdom a han (barony) under its ruler Sho Tai. In 1879 this became Okinawa Prefecture and Sho Tai was forced to relocate to Tokyo. (He was granted a noble title and disencumbered of any further role in the governance of the islands his ancestors had ruled for over 400 years.) One might say Okinawa was the first Japanese colony. (The Ryukyuans, ethnically distinct from the Japanese of the main islands, and speaking a language incomprehensible to the latter, did not necessarily welcome the regime change.)

Still, Tokyo did not at that point assert sovereignty over the Diaoyu islands south of the Ryukyus. In 1885 the governor of the prefecture proposed that it do so, but the Japanese foreign minister, Inoue Kaoru, and Prime Minister Yamagata Aritomo, refused the suggestion. They felt that since the islands had Chinese names and were considered Chinese by the Qing court, Japan should not lay claim to them. This may have been a purely pragmatic decision, motivated not by any respect for Chinese sovereignty but concern for Japan’s international reputation. In any case, the Japanese rulers did not at that time consider the small islands part of their new prefecture but Chinese territory.

4. In 1894-5 Japanese and Chinese forces fought a war in Korea and Manchuria. China had

responded to the Korean king’s request for assistance in repressing a huge peasant rebellion. Citing an earlier agreement with China, Japan dispatched troops too. They kidnapped the Korean king and forced him to issue an edict terminating existing Sino-Korean agreements and authorizing the Japanese to expel Chinese troops from the country (even though the rebellion had been quelled and the Chinese had pledged to withdraw).

Most historians believe that Japanese forces provoked the Chinese in July 1894, triggering the Sino-Japanese War and a crushing Chinese defeat. (About 35,000 Chinese dead or wounded, compared to 5,000 Japanese, although twice that many Japanese died from disease.) China sued for peace and was obliged to pay Japan an indemnity, cede control over the Liaodong Peninsula in southern Manchuria, and hand over the island of Taiwan (Formosa) and Penghu (Pescadore) islands west of the island to Japanese colonization. (The Liaodong Peninsula was soon returned to China due to intervention by the Russians, French and Germans.)

Taiwan became, in the words of Diet member and historian Takekoshi Yoshisaburo, Japan’s “colonial university” in which administers honed their skills at civilizing “barbarians.” After 1905 Japanese carefully studied British colonial policies in Africa and elsewhere, the better to administer the Japanese Empire expanding to include Korea, southern Sakhalin, Shandong, the Northern Marianas, the Marshall Islands, Micronesia, Manchuria, China.

The Shimonoseki Treaty of 1895 specified that “the island of Formosa, together with all islands appertaining or belonging to the said island of Formosa” would be ceded to Japan. It did not mention the Diaoyu group by name. But the Japanese claim to sovereignty rests almost entirely on this clause—in an agreement imposed upon China following a war of imperialist aggression.

Tokyo also claims that Japan “discovered” the islands as of 1884 when it carried out a survey. An academic accorded them the name Senkaku in 1890. In January 1895 the Japanese government erected a marker on the Senkaku islands and incorporated them into OkinawaPrefecture as part of Ishigaki City.

5. The establishment of Japanese control over the Ryukyus (1872) and Taiwan and the Diaoyu islands (1895) were all part of a continuum of imperialist expansion appropriately condemned by the Allies in World War II and formally repudiated by postwar Japanese leadership. Following defeat in the Second World War, the Japanese government was forced to accept the Allies’ decision expressed in the Cairo Declaration of 1943 which stated that “Japanshall be stripped of … all the territories Japan has stolen from the Chinese,such as Manchuria, Formosa, and the Pescadores, [which] shall be restoredto the Republic of China.” The Potsdam Declaration of 1945 had reiterated that “Japanese sovereignty shall be limited to the islands of Honshu, Hokkaido, Kyushu, Shikoku and such minor islands as we determine.” That is to say: the Allies did not acknowledge Japanese sovereignty even over the Ryukyu Islands, much less the Diaoyu group.

From the beginning of the Occupation in 1945, the main islands of Japan and the Nansei Shoto (“Southwest Group,” the islands between Kyushu and Taiwan including the Ryukyus) were administered separately by U.S. forces. The Ryukyus became a U.S. “trusteeship,” the main island of Okinawa covered (to this day) with U.S. military bases. Taiwan reverted to Chinese sovereignty and from 1949 became the headquarters of the routed Guomindang, viewed by Beijing as a “renegade province.”

In the spirit of Cairo and Potsdam, the Diaoyu islands between the Ryukyus and Taiwan might have been returned to Chinese control at the end of the war in 1945. Instead the U.S. military treated them as the defense perimeter of the occupied Ryukyus, in effect recognizing the legitimacy of the Japanese claim. In other words, while denying Japanese sovereignty over the Ryukyus, which had been established in 1872 in relatively peaceful fashion, the U.S. recognized the incorporation of the Diaoyu isles into Okinawa Prefecture dating to 1895, established (let us repeat) as the result of a predatory war. It apparently did not regard these islands as “territories…stolen from the Chinese” to be “restored to the Republic of China.”

7. In the San Francisco Treaty of 1951, which formally ended the war and paved the way for the return of sovereignty to the Japanese government, Japan agreed to “concur in any proposal of the United States to theUnited Nations to place under its trusteeship system, with theUnited States as the sole administering authority, Nansei Shotosouth of 29 degrees north latitude (including the Ryukyu Islandsand the Daito Islands).”

Japan thus acceded to the indefinite U.S. colonization of Okinawa and adjoining islands, including Diaoyu/Senkaku.

In its dispute with Beijing, Tokyo can point out that China did not attend the San Francisco conference that formally ended the war. The U.S. did not invite representatives of the newly founded People’s Republic, causing the Soviets and some of their allies to boycott the proceedings or refuse to sign the peace treaty. The Japanese government argues that, having made no agreement with China over the dispensation of the islands, its claim to sovereignty dating to 1895 still holds and that its agreement to return Taiwan to Chinese sovereignty does not include what it calls the Senkaku islands because they’re actually part of Okinawa Prefecture.

8. The Occupation ended formally in 1952, and sovereignty was restored to Japan. (This sovereignty was and is shaped by a “security treaty” with the U.S., the presence of tens of thousands of U.S. troops, and virtual U.S. veto power over Japanese foreign policy.) But the U.S. continued to administer the Nansei Shoto including Okinawa Prefecture up until 1972, when following a long campaign by the Japanese people and Diet, sovereignty over Okinawa Prefecture as well as the Diaoyu islands was restored to Japanese control. (Again, a limited sovereignty. Japanese leaders have sought in vain to significantly reduce the unpopular U.S. military presence on Okinawa.)

Article 5 of the U.S.-Japan Security Treaty plainly states: “Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes.”

* * *

Such are the basic historical facts pertaining to the conflicting territorial claims. What of the future?

By the terms of the U.S.-Japan Security Treaty, the U.S. must help defend the security of all Japanese territory. Would it challenge a Chinese effort to seize control of these tiny islands? Washington sends mixed signals.

On the one hand, U.S. diplomats have stated repeatedly that the U.S. takes no position on the sovereignty issue. In Sept. 1996 a State Department spokesman proclaimed the U.S. “neutral” on Senkaku. In April 1999 the U.S. ambassador to Japan, Thomas S. Foley, stated, “The United States notes the Japanese claim to these islands, and we are not, as far as I understand, taking a specific position in the dispute…. We do not believe that these islands will be the subject of any military conflict, and so consequently, we do not assume that there will be any reason to engage the security treaty in any immediate sense.” Defense Secretary Leon Panetta again stated in Beijing two weeks ago that the U.S. had no position on the dispute.

On the other hand, in 1996 both Kurt Campbell, assistant secretary of defense, and Secretary of Defense William Perry specified that the U.S.-Japan Security Treaty covered the Senkaku Islands. In 2004 Adam Ereli, Deputy Spokesman at the State Department declared, “The Senkaku Islands have been under the administrative control of the Government of Japan since having been returned as part of the reversion of Okinawa in 1972. Article 5 of the 1960 U.S.-Japan Treaty of Mutual Cooperation and Security states that the treaty applies to the territories under the administration of Japan; thus, Article 5 of the Mutual Security Treaty applies to the Senkaku Islands.” In 2006 the U.S. ambassador to Japan, Thomas Schieffer, told Kyodo News that he considered “the islands as territory of Japan.”

Campbell while acknowledging a U.S. obligation to “defend” the Diaoyu/Senkaku islands if attacked, acknowledges that the sovereignty claim of Japan is dubious. “Sovereignty of the Senkaku Islands,” he observed, “is disputed. The U.S. does not take a position on the question of the ultimate sovereignty of the Senkaku/Diaoyu Islands. This has been our longstanding view. We expect the claimants will resolve this issue through peaceful means and we urge all claimants to exercise restraint.”

Just two months ago a State Department official repeated, “The Senkakus would fall within the scope of Article 5 of the 1960 U.S.-Japan Treaty of Mutual Cooperation and Security because the Senkaku Islands have been under the administrative control of the government of Japan since they were returned as part of the reversion of Okinawa in 1972.”

In other words: the U.S. doesn’t have a position on the sovereignty issue, but will still fight to defend Japan’s sovereignty claim, as required by treaty. The remote barren rocks, like all of Japan, fall under the U.S.’s “nuclear umbrella.” This position can only embolden those in Japan eager to provoke China by constructing lighthouses (1978 and 1996) and most recently lobbying for the purchase of the islands by the Japanese government.

* * *

Tokyo’s case for sovereignty is meager. The Chinese were there first, visiting, mapping, and defining the isles as the boundary between China and the Ryukyu kingdom from at least the fifteenth century. Japan only acquired the islands as war booty in 1895, and as such, pursuant to the Cairo and Potsdam Declarations, they should have been returned to their rightful owner at the end of the Second World War. However, the U.S. elected to retain them within its security parameters as administrator of Okinawa up until 1972, then turned over primary defense responsibilities to the Japanese “Self-Defense Forces” in that year. The U.S. proclaims itself “neutral” but it’s not. It’s troubled by the rising power of its Chinese rival, worried about conflict in the South China Sea, but committed by treaty and its geopolitical strategy to support its longtime ally Japan.

It’s a dangerous situation. While angry protesters pelt the Japanese Embassy with eggs, waving banners with such slogans as “Kill Japanese Robbers,” China’s most senior military-political commissar, Gen. Xu Caihou, vice chairman of the Central Military Commission, orders the People’s Liberation Army to be “prepared for any possible military combat.” While the likelihood of war seems remote, the Chinese elite has sought to shift attention from the faltering economy by encouraging nationalistic sentiment, especially among the youth who may find in the Diaoyu cause a relatively safe way to vent dissent. Portraits of Mao Zedong have become regular features of mass demonstrations; Mao is remembered as the heroic leader of the struggle against Japanese and later U.S. imperialism—a sharp contrast to the current leadership in their business suits who embrace capitalist-imperialist investment and steer foreign policy to encourage it. The mix of youth, the reverent memory of the eternal rebel Mao, contempt for a corrupt leadership and indignation over historical injuries might have unpredictable consequences.

The Chinese government routinely accuses Japan, more than any other country, of “hurting the Chinese people’s feelings” (shang hai zhong guo ren de gan qing)—an understated way of saying the Chinese people are getting very ticked off every time the Japanese Education Ministry approves a high school history textbook that prettifies the Japanese invasion and occupation of China in the 1930s; or when politicians and academics question whether there was ever a Rape of Nanking (the moral equivalent of Holocaust denial); or when prime ministers visit Yasukuni Shrine where Class A war criminals are enshrined; or when Japan claims territory not on valid historical grounds but on narrow legalistic grounds rooted in a predatory war.

It may seem irrational for protesters to attack (mostly Chinese-owned) sushi restaurants or Japanese-owned factories or retail stores to vent such hurt feelings. The rhetoric heard is often nakedly racist (“Kill all Japanese devils!”)—plain testimony to the fact that the ideal of proletarian internationalism isn’t as prevalent as it should be in a country whose leaders cling to the pretense of “socialism with Chinese characteristics.” But for Japan in the face of this wave of hurt feelings to blithely assert that “there is no dispute” is insulting. It compounds the indignation.

And for the U.S. top say simultaneously, “We have no position” and “The Senkakus fall under Article 5 of the Security Treaty” seems illogical, contradictory. Perhaps Washington thinks it can restrain Japan by affecting neutrality in the dispute, while deterring China from action by asserting a treaty obligation to “defend” these islands as Japanese territory. It’s a dangerous game.

* * *

Many are talking about the South China Sea as the “new Persian Gulf.” Unlike the old—clearly demarcated—Persian Gulf, this one is contested between the PRC, Taiwan, Japan, the Philippines, Vietnam, Malaysia and Brunei. India’s Oil and Natural Gas Corporation last year (Sept. 2011) signed an agreement with PetroVietnam to explore for oil in ocean blocks claimed by both Vietnam and China. (India has become closely allied to the U.S., while former foe Vietnam now welcomes U.S. warships to its shores.)

The Chinese Foreign Ministry responded: “China enjoys indisputable sovereignty over the South China Sea… [W]e are opposed to any country engaging in oil and gas exploration and development in waters under China’s jurisdiction.” But it offered “to engage in peaceful negotiations and friendly consultations to peacefully solve the disputes over territorial sovereignty and maritime rights so as to positively contribute to peace and tranquility in the South China Sea area.”

We will see how the claim to “indisputable sovereignty’ over the Diaoyu group and other area islands surrounded by oil and natural gas allows for peaceful solutions with countries backed by the U.S.A. Bloodied by two failed wars, the U.S. is led by officials committed to a treaty that could embroil the country in yet more conflict. It has with some fanfare shifted its “pivot” (or “rebalance of forces”) from Southwest Asia to the Pacific in order to “contain” rising China. On the one hand Defense Secretary Leon Panetta invites China to participate in joint naval operations with the U.S. (such as the planned 2014 Rimpac exercise); on the other hand he tells Chinese vice president (soon to be president) Xi Jinping on September 19 that the Senkaku Islands are covered by the U.S.-Japan Security Treaty.

It’s a clear threat to enforce a provision of a shameful treaty signed over a century ago, as Japan and the western powers carved up a weak, demoralized China; ensure that stolen resource-rich territory remains under U.S.-Japanese authority; and remind the peoples of the region that no borders on the Pacific Rim can change without distant Washington’s supervision and approval.

For all their bluster, Chinese officials are unlikely to, as they say, allow Diaoyu to become a “disturbing factor” in the Sino-Japanese relationship (or the Sino-U.S. relationship) at least in the short term. Still, there are those angry Chinese youth demanding action, a modernizing military eager to flex its muscles, and those Taiwanese fishermen planning nonviolent protest with hundreds of fishing boats. Smack in the center of the new U.S. “pivot,” a situation could spin out of control.